Forget The Jobs Report, It’s The USD/JPY That Moves Markets
Adobe Systems Incorporated (NASDAQ:ADBE) has a classic bear flag on the daily chart. This is coming off of a reversal candle from last week. These signals show a very bearish setup for the coming days. Also, please note that Adobe is flat on the day while the markets are nicely higher. This is another weak signal to pay attention to called relative weakness.
Look for a down move into next week the potential to reach the $61.00 level on a larger drop in the markets.
Anytime a trader or investor looks at a stock chart they should look to see if the instrument is making a new high, or a lower high. Continuous lower highs are a good indicator that further weakness is ahead for the equity.
Earlier today, the leading mining equipment company, Joy Global Inc (NYSE:JOY) reported earnings. The stock is trading higher by $1.91 to $57.73 a share. While this pop in the stock seems great in the near term the weekly and monthly charts are signaling a move lower. You see, the larger time frames have a series of lower highs on the chart beginning with the April 2011 top. Anytime a trader notices lower highs on a chart they must assume that the stock is ultimately going to trade lower before making a final bottom. According to my calculations, JOY stock has downside potential toward the $37.00 area before making a significant low. Now please understand, this does not mean the stock is going to decline today or even next week; the current chart pattern just tells us that the stock is ultimately going to trade lower. Therefore, as smart traders/investors we need to be prepared for that move.
Other stocks in the mining equipment sector also have lower highs on the larger time frames, so this chart pattern is not specific to JOY only right now. Leading mining equipment stocks such as Deere & Company (NYSE:DE), and Caterpillar Inc (NYSE:CAT) are forming the same exact pattern on the larger time frame, these stocks are just as susceptible to lower prices in the months ahead.
When finding a great swing trade, one must look at multiple factors. I hope to reveal my mindset fully, helping the average investor understand how I reached my decision to short Dupont (NYSE:DD). I believe a short on this stock an extremely high success rate, bordering on 90% over the next month. The downside target is $64.75, then $59.95.
1. The chart is extended. In the last month DD has jumped over 10% and currency is trading at highs not seen since the year 2000.
2. There is a key gap fill in this range from 2000 that the stock has currently filled.
3. Connect the recent highs from May 31st, 2013. They connect perfectly and everytime the stock has touched this level, it has pulled back.
4. There is a time count on the daily chart extending into the doji forming today. This should be a short term pivot top.
5. The stock has extended itself to the max move above the 200 moving average. Note how throughout history, the stock has never been much more extended from its 200 moving average prior to pulling back.
These reasons create a very solid base for a short trade on Dupont (DD). The downside should begin shortly and last at least a month or two.
This morning, leading retailer Kohls Corp (NYSE:KSS) is coming under some selling pressure. The popular retailer is falling lower by 0.76 cents to $55.13 a share. Short term day traders should keep an eye on the $54.03 support level for an intra-day bounce. This should be a level where the institutional money will likely step in and sponsor the stock. Other leading retail stocks that are declining lower today include Target Corp. (NYSE:TGT), Dollar Tree, Inc. (NASDAQ:DLTR), and Costco Wholesale Corporation (NASDAQ:COST). Keep a close eye on these levels and stocks as they will present good profit making opportunity.
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